Litigation Archives - Page 59 of 107 - The National Law Forum

Construction Liens on Leased Commercial Premises

In general, a contractor or supplier is entitled to file a lien against a commercial property if they have performed work or provided materials pursuant to a written contract with the owner. These lien claims must be filed within 90 days of the last date of providing materials or services for the project.

On the other hand, if a contractor or supplier is providing materials or services for a tenant of a commercial property, the rules are different. The differences as to what the lien may attach to are discussed in detail below.

If the tenant of the property entered into a contract for the improvement of the property and the owner directly authorized the improvement in writing, the lien may attach to the real property. The proper way to ensure that a lien may attach to the real property is to have the owner of the property sign off on and approve any contract for the improvement of the real property.

As a contractor or supplier, it is suggested that you obtain the owner’s authorization which would thereby allow you to assert a lien claim against the property itself in the event of non-payment. This can become a very powerful tool on collecting an unpaid balance, as an action to foreclose upon the lien could be brought. This would place a great deal of pressure on the tenant to pay the outstanding balance.

Conversely, if the owner of the property does not sign off on or agree to the improvement to the real property, a lien claim would only attach to the lease hold interest of the tenant. Under these circumstances, the lien claim would not attach to the real property itself, but instead, solely to the lease hold interest held by the tenant.

The question then becomes what would be the value of the lease hold interest.

Depending upon the use of the property by the tenant, the lease hold interest could be quite valuable, or it may be close to worthless. Obviously, if the tenant is fully invested in the property the lien claim may carry substantial value, as it may force the tenant to satisfy the claim. Then again, if the lease hold interest is solely an office or two within a commercial property the lien claim may not possess significant value.

The above provides a general overview as to a lien claim on a commercial property which is occupied by a tenant. It is suggested, as a contractor or supplier, that you have the owner sign off for improvements. This gives you greater leverage when attempting to collect on a lien claim, and also, could force the sale of the property to satisfy same.

For more Construction & Real Estate legal analysis, go to The National Law Review

CNN Investigates Expanding Use of Nuedexta in Nursing Homes

A recent investigation by CNN brought to light the expanding and allegedly inappropriate use of the prescription drug Nuedexta in nursing homes throughout the country. Nuedexta is FDA-approved to treat a rare condition known as pseudobulbar affect (PBA).

What is Pseudobulbar Affect?

Pseudobulbar affect is characterized by sudden and uncontrollable laughing or crying. It is associated with people who have multiple sclerosis (MS) or amyotrophic lateral sclerosis (ALM), known as Lou Gehrig’s disease. Avanir Pharmaceuticals has been aggressively targeting elderly nursing home residents with the drug, the CNN investigation found, although PBA reportedly impacts less than 1 percent of Americans, based on a calculation using the drug maker’s own figures.

What the Investigation Revealed

Nuedexta prescription use in nursing homes is rising at a rapid rate, even though Avanir Pharmaceuticals acknowledges that the drug has not been extensively studied in elderly patients, according to CNN.

CNN found that Avanir Pharmaceutical’s sales force is focused on expanding the drug’s use among elderly patients suffering from dementia and Alzheimer’s disease, coupled with “high-volume prescribing and advocacy efforts by doctors receiving payments from the company.”

Since 2012, more than half of all Nuedexta pills have gone to long-term care facilities, according to data obtained from QuintilesIMS, which tracks pharmaceutical sales. Total sales of Nuedexta reached almost $300 million that year.

In response to requests to be interviewed for the CNN article, Avanir reportedly responded by email with a statement that PBA is often “misunderstood” and that the condition can affect people with dementia and other neurological disorders that are common in nursing home residents.

Nuedexta is approved by the Food and Drug Administration (FDA) to treat anyone with PBA, including those with neurological conditions such as dementia. But geriatric physicians, dementia researchers, and other medical experts reportedly told CNN that PBA is extremely rare in dementia patients.

How Can Nuedexta Impact Nursing Home Residents?

One study of 194 patients with Alzheimer’s disease found that patients taking Nuedexta suffered more than twice as many falls as those patients taking a placebo.

CNN reports that Lon Schneider, director of the University of Southern California’s California Alzheimer’s Disease Center, reviewed information from several hundred reports obtained by CNN through the Freedom of Information Act. Schneider expressed concern about potential interactions between Nuedexta and other medications intended to treat problematic behaviors. These medications may include antipsychotic drugs, antidepressants, and anti-anxiety medication which are often given to nursing home residents to suppress anxiety or aggression that may occur with Alzheimer’s disease and other dementia types.

Why Are Doctors Prescribing Nuedexta to Nursing Home Residents?

According to CNN’s analysis of government data, between 2013 and 2016, Avanir and its parent company, Otsuka, paid almost $14 million to physicians for Nuedexta-related consulting, promotional speaking, and other services. The companies also spent $4.6 million on travel and dining costs. CNN found that in 2015 nearly half the Nuedexta claims filed with Medicare came from doctors who had received money or other perks.

According to the investigation, state regulators have found that doctors may inappropriately diagnose nursing home residents with PBA to justify the use of Nuedexta to treat confusion, agitation, and unruly behavior. Further, doctors may inappropriately diagnose nursing home residents with PBA to justify the use of Nuedexta to treat confusion, agitation, and unruly behavior. A diagnosis of PBA may be used because “off-label” prescriptions written by doctors using Nuedexta to treat patients who have not been diagnosed with PBA would typically not be covered by Medicare.

What Adverse Events Have Been Reported With Nuedexta Use By Nursing Home Patients?

Soon after Nuedexta came on the market, doctors, nurses, and nursing home patients’ family members began filing reports including rashes, dizziness, and falls as well as comas and death. CNN found that Nuedexta was listed as a “suspect” medication in nearly 1,000 adverse event reports received by the FDA. These reports disclosed side effects, drug interactions, and other issues. According to CNN, the FDA declined to comment on adverse events or the approval process for Nuedexta.

For more legal analysis, go to The National Law Review

Education Secretary Signals Shift in Title IX Policy for Dealing with Sexual Misconduct Allegations

On September 7, 2017, Secretary of Education, Betsy DeVos announced a marked policy shift in how the Department of Education will approach Title IX enforcement with regard to sexual misconduct. DeVos indicated that the Department plans to withdraw the controversial Dear Colleague Letters issued during the Obama administration. Instead, the Department will issue formal regulations that will establish a new Title IX framework for educational institutions investigating and responding to sexual misconduct allegations. The full text of Secretary DeVos’s speech can be found here.

Title IX has been a dominant topic in higher education since 2011, when the Obama Administration issued the “Dear Colleague Letter” explaining that a failure to adequately address sexual misconduct on campus constituted discrimination on the basis of sex in education programs under Title IX.^[1] Among other things, the Dear Colleague Letter set forth how schools should respond to sexual misconduct, dictated specific procedures schools must follow to investigate and adjudicate such misconduct, and established various other requirements such as climate surveys, standards of proof, and survivor sensitivity. The Letter made clear that a failure to meet these expectations, and the expanded guidance issued by the Department in 2014, could result in a loss of federal funding, and thus had a swift and substantial impact on the way educational institutions responded to reports of sexual assault or harassment.

In a speech at the George Mason University School of Law on September 7, 2017, Secretary DeVos said that schools will still be required to address sexual misconduct. However, she announced the Department would be rescinding the Dear Colleague Letters and instead regulate through actual regulations, subject to notice and comment. Secretary DeVos lamented that “for too long, rather than engage the public on controversial issues, the Department’s Office for Civil Rights has issued letters from the desks of un-elected and un-accountable political appointees.” She made it clear that “the era of ‘rule by letter’ is over.” DeVos emphasized the Department’s ongoing commitment to protecting victims of sexual violence. But she also clearly signaled that the Department will pay more attention to the due process rights of the accused, including questioning the “preponderance of the evidence” standard that the Department required all schools to use in adjudicating sexual misconduct cases. DeVos promised to work more closely with educational institutions, rather than operating “through intimidation and coercion.” And she said the Department would be open to exploring alternative methods of enforcing Title IX, including the possibility of voluntary regional centers where outside professionals would be available to handle Title IX investigations and adjudications.

DeVos did not indicate exactly what the new Department rules might entail, or when they will come into effect, nor has there been an official withdrawal of the Dear Colleague Letter yet. DeVos did indicate, however, that the Department will base the new rules on public feedback and will take into account the views of educational institutions, professionals, and individual students. In her closing remarks, DeVos noted that the Department of Education’s “interest is in exploring all alternatives that would help schools meet their Title IX obligations and protect all students. [The Department] welcome[s] input and look[s] forward to hearing more ideas.”^[2]

Schools should take advantage of the Secretary’s call for comments, as the Department moves towards the development and implementation of a different and hopefully clearer set of rules governing the enforcement of Title IX. However, schools should also anticipate a period of uncertainty until final rules are issued. Moreover, schools should be aware of the continuing (and possibly conflicting) state law obligations that have been put into place following the Dear Colleague Letter. For example, many states including Connecticut and New York have passed legislation mandating use of the preponderance of the evidence standard in evaluating sexual misconduct on college campuses. We anticipate further, more detailed guidance in the next few weeks as the Department of Education works to implement Secretary DeVos’s policy announcements.

_{[1] 20 U.S.C. §§ 1681 et seq.; 34 C.F.R. Part 106.}

_{[2] Secretary DeVos Prepared Remarks on Title IX Enforcement, available here.}

The Supreme Court Enters the Digital Age

Electronic filing is coming to the U.S. Supreme Court! Effective November 13, 2017, amendments to the Supreme Court’s rules take effect that require represented parties (and their amici) to submit petitions, briefs, and most other filings through the Court’s electronic filing system. The Rules explain that the new e-filing requirements are “[i]n addition to the filing requirements” already set forth in the Rules. Accordingly, parties and their amici will still be required to submit forty copies of their briefs on paper in booklet form, and they now must additionally submit one paper copy on 8.5 x 11 inch paper (in case the Clerk’s office needs to scan the brief for any reason). The paper submission remains the “official filing” for purposes of determining timeliness, but e-filing is supposed to occur “contemporaneously” with the paper filing. Pro se parties will continue to file submissions exclusively on paper; those submissions will be scanned by the Clerk’s office and posted on the Court’s web site.

Attorneys practicing before the Supreme Court will be required to register for an account on the Court’s electronic filing system. The Court warns that it could take two days for a new account to be approved, so attorneys should register well in advance of a filing deadline. Attorneys of record will also now be required to file notices of appearance using the Court’s e-filing system. Under the previous regime, the submission of a brief with an attorney’s information constituted a notice of appearance. Now, an attorney need not file a notice of appearance to submit a case-initiating document, such as a cert petition, but must make an appearance before filing any other document.

While the advent of e-filing creates a few new procedural hurdles, it also presents some obvious benefits to litigators. Primarily, all documents e-filed with the Court will be made available to the public free of charge, which will make it easier to access briefs and petitions filed in other cases. Moreover, counsel who enter an appearance will receive immediate notifications of any activity in the case. Under the old system, a party would not learn of an adversary’s filing until it arrived on paper by courier sometimes three days later, unless opposing counsel was courteous and emailed a courtesy copy.

E-filed documents will be posted immediately to the Supreme Court’s web site. (The lone exception is a document that commences a new case, which will first be reviewed by the Clerk’s office and the case assigned a number before the document becomes available to the public). Accordingly, the Court has promulgated new rules and guidelines to ensure that confidential information does not accidentally become public. Specifically, new Rule 34.6 incorporates the privacy protections found in Fed. R. Civ. P. 5.2 in most cases. Moreover, documents containing material under seal must not be submitted electronically but only in paper form. (This also holds true also for redacted forms of briefs submitted for the public record).

Given the Supreme Court’s arcane procedural rules, Proskauer’s Appellate Department recommends that any party or amicus practicing before the Court use an appellate printer to assist with filings. Printers are typically well-versed in the Court’s procedural minutiae and will be able to help you navigate the Court’s new e-filing process.

For more legal analysis, go to The National Law Review

Cannabis Prop 65 Liability: Lessons Learned from the Dietary Supplement Industry

The cannabis industry appears to be next on the liability “hit list” under California’s notorious Proposition 65 statute. In June 2017, more than 700 Prop 65 notices were served on California cannabis businesses. Companies in this emerging market should start mitigating risk under Prop 65 now. Fortunately, lessons can be learned from the dietary supplement industry’s expensive Prop 65 battles over the past decade.

California’s Prop 65, also known as the Safe Drinking Water and Toxic Enforcement Act, requires a warning on all products that contain chemicals known to cause cancer or reproductive harm, even in amounts a fraction of what is deemed safe by federal standards. Prop 65 has caused havoc within the dietary supplement and herbal product markets over the past decade, led by a cottage industry of “bounty hunter” attorneys who have weaponized the statute, ostensibly in the public interest but in reality as a lucrative for-profit business. These bounty hunters are now turning their attention to cannabis. Though amendments to the statute were adopted in 2016 for the purpose of reducing this abuse, Prop 65 litigation will continue and cannabis companies must stay vigilant.

Many businesses faced with the necessity of using a Prop 65 warning have no concern with the impact that a warning may have on sales or with consumer confidence in the product. After all, who would look twice at a Prop 65 warning on motor oil or insect repellent? Like the dietary supplement industry before them, however, many cannabis businesses will resist including a warning that the product contains a chemical known to cause cancer or reproductive harm. Many cannabis products rely on the consumers’ belief that the product is harmless and even therapeutic. For many, this will be an important business decision that may give rise to expensive mistakes − a decision should be made with an understanding of the basis for Prop 65 liability and exposure.

What Is Prop 65 and What Does It Require?

Prop 65 was passed by California voters in 1986 after an aggressive lobbying campaign by environmental and public health activists. The stated purpose of Prop 65 was to improve public health. The general consensus, however, is that Prop 65 has placed an undue burden on California businesses while achieving no significant impact on public health over the past 30 years.

As noted above, Prop 65 requires a warning on all products that contain chemicals known to cause cancer or reproductive harm. There are more than 900 such chemicals listed, and marijuana smoke has been included on the list since 2009.

For a warning to be acceptable under Prop 65, it must (1) clearly make known that the chemical involved is known to cause cancer and/or birth defects and/or other reproductive harm and (2) be given in such a way that it will effectively reach the person before he or she is exposed. The warnings must be “clear and reasonable,” meaning that the warning may not be diluted by other language. Various means of communicating the warning are allowed, including product-specific warnings on a posted sign or shelf, warnings on the product label or electronic warnings for internet purchases.

Important Exemptions

There are several important exemptions to Prop 65 that make a warning unnecessary. Businesses with nine or fewer employees are exempt from the statute. There also is an exemption involving chemicals that occur naturally in food. Lead, for example, will be considered naturally occurring only if it “is a natural constituent of a food” and is not added as a result of human activity such as pollution or poor manufacturing processes. The burden is on the company to prove the exemption, however, which is typically time-consuming and expensive.

Another important exemption is provided by “safe harbor” exposure levels for many chemicals on the Prop 65 list, below which no warning is required. The listed chemicals include additives or ingredients in pesticides, food, drugs and common household products. Most food contains at least some level of one or more of these substances. Prop 65 safe-harbor levels, however, are in many cases around 1,000 times lower than levels set by the Food and Drug Administration (FDA), Environmental Protection Agency (EPA) and World Health Organization (WHO). The exposure levels established by Prop 65 are often lower than what occurs naturally in fruits, vegetables, grains and even drinking water.

For example, the Prop 65 limit for lead is 0.5 mcg / day, which is below the amount of lead naturally found in many fruits, vegetables and herbs grown in non-contaminated soil. By comparison, the FDA allows 75 mcg / day and the European Union allows 250 mcg / day for lead. The European Food Safety Authority estimates the average adult consumes around 50 micrograms per day, which is 100 times the Prop 65 limit. It is nearly impossible to manufacture herbal products, including cannabis, without trace amounts of lead. Therefore, despite the “naturally occurring” exemption, discussed above, it can be dangerous to simply assume that an herbal product, including cannabis, complies with safe-harbor levels.

Only about 300 of the more than 900 Prop 65 chemicals have specific safe-harbor levels. For those chemicals without a safe-harbor limit, the burden will be on the cannabis business to establish that the subject chemical is within a safe range. This typically requires expensive testing, the results of which may be open to multiple interpretations as to whether a warning is required.

Determining the Exposure Level

Determination of the “exposure level” also is an important consideration. Prop 65 focuses on the level of a chemical to which the consumer is actually exposed. Although a product may have a very low amount of a chemical on the Prop 65 schedule that is below the safe-harbor level, liability under the statute may nevertheless be triggered based on the recommended serving size. It is advisable for companies to work with a laboratory that specializes in Prop 65 testing to determine the cumulative exposure level in order to verify the recommended serving size.

Enforcement of Prop 65

Prop 65 is enforced through litigation brought by the government or by private attorneys that “act in the public interest.” It is the threat of these private lawsuits that causes such consternation among those targeted with Prop 65 liability. After a 60-day notice period, the attorney may file a civil suit against the offending company. Typically, the plaintiff will demand that the defendant provide warnings compliant with Prop 65, pay a penalty, and either recall products already sold or attempt to provide health hazard warnings to those who purchased the products.

Though purportedly brought in the public interest, it is the collection of penalties and attorneys’ fees that in reality drives this litigation. Prop 65 allows individuals who bring suit to recover 25 percent of the penalties awarded, which by statute is calculated at $2,500 per violation per day. Amendments made to Prop 65 in 2016 allow for certain voluntary actions by the defendant – reformulation of the product, for example – in lieu of penalties. The threat of paying the plaintiff’s attorney’s fees makes litigating Prop 65 cases potentially very expensive. The attorney is incentivized to drag out the litigation, and the longer the case goes on, the more difficult it becomes to resolve because of the mounting fees.

This framework has created a cottage industry of Prop 65 “bounty hunter” lawyers who affiliate with “public interest” organizations that bring these cases for profit. According to the California Attorney General, 760 settlements were reported in 2016 with total settlement payments of more than $30 million. Attorneys’ fees accounted for 72 percent of that amount. The 2016 amendments to the statute have attempted to address these abuses to some extent by requiring a showing that the public benefits derived from the settlement are “significant” and by requiring contemporaneous record keeping for fees and costs sought to be recovered. Prop 65 litigation nevertheless continues to burden many industries in California, now including the cannabis industry. For Prop 65 liability, prevention is certainly less costly than a cure.

For more legal analysis go to The National Law Review

Recording Conversations with Your Cellphone: with Great Power Comes Potential Legal Liability

In the cellphone age, nearly everyone walks around with a multi-tasking recording device in their pocket or purse, and it comes in handy for many of our modern problems: Your dog suddenly started doing something adorable? Open your video app and start rolling. Need to share that epic burger you just ordered with your foodie friends? There’s an app for that. Want to remember the great plot twist you just thought of for that novel you’ve been working on? Record a voice memo.

Sometimes, though, the need arises to record more serious matters. Many people involved in lawsuits choose to record conversations with their phones, all in the name of preserving evidence that might be relevant in court. People involved in contentious divorce or child custody cases, for example, might try to record a hostile confrontation that occurred during a pickup for visitation. Conversely, others might be worried that an ex-spouse has secretly recorded a conversation and plans to use it against them out of context.

But while everyone has the power to record just about anything with few swipes on their phone, do they have the legal right to do so? If not, what are the possible consequences? Can you even use recorded conversations in court? Consider these important questions before your press record.

Criminal Liability: Can you go to jail just for recording someone’s conversation?

The short answer: Yes. Under Michigan’s Eavesdropping law,^[1] it is a felony punishable by up to two years and $2,000 to willfully use any device to eavesdrop on (meaning to overhear, record, amplify, or transmit) a conversation without the consent of all participants in that conversation.^[2]It is also a felony for a person to “use or divulge” any information that they know was obtained through illegal eavesdropping.^[3]

But there is one important distinction that Michigan courts have recognized: if you are a participant in the conversation, then you do not need permission of other participants to record the conversation (at least not when it comes to the eavesdropping law; there may be other laws that apply, as discussed below).^[4] This makes sense given the purposes of the law. The theory is that if you are a participant in the conversation, then other participants at least have a chance to judge your character and determine if you are the kind of person who might relay the conversation to others (either verbally or by making a recording).

The bottom line is that if you use a device, like your cellphone, to record, overhear, amplify, or transmit a conversation that you are not a part of without the permission of all participants, you could face criminal consequences.

Civil Liability: If someone records your private conversation, can you file a lawsuit against them?

The short answer: Yes. The eavesdropping statute allows eavesdropping victims to bring a civil lawsuit against the perpetrator.^[5] But the same distinction applies; you cannot sue someone for recording a conversation that they participated in.

Before filing a civil eavesdropping claim, though, consider what if anything there is to gain. The eavesdropping statute permits a judge to issue an injunction prohibiting the perpetrator from further eavesdropping. This may be a valuable remedy if there is a risk that the eavesdropper would otherwise continue eavesdropping on your conversations. The statue also allows a plaintiff to recover actual damages and punitive damages from the wrongdoer. In many cases, actual damages will likely be minimal, and punitive damages are subject to the whims of the judge or jury deciding the case. A result, the cost of litigation may exceed any monetary recovery unless actual damages are significant or the eavesdropper’s conduct was egregious enough to elicit a large punitive award from a jury.

Evidence and Admissibility: Can I use a recorded conversation in court?

Many people are familiar with the exclusionary rule that arises from the Fourth Amendment of the United States Constitution, which provides that if police officers obtain evidence as a result of an illegal search or seizure, then the prosecution is prohibited from using that evidence to support their case. This raises the question:

If a regular civilian obtains evidence by recording a conversation in violation of the eavesdropping statute, is that evidence automatically excluded from court proceedings?

The short answer: No. The exclusionary rule is specifically designed to curb the potentially oppressive power of the government in order to guarantee the protections of the Fourth Amendment, at the expense of excluding potentially valuable evidence from court proceedings. Since the Fourth Amendment only restricts government conduct, the exclusionary rule only applies to evidence obtained as a result of unconstitutional government action. As a result, even if a private citizen breaks the law and records your conversation, that recording is not automatically excluded from court.^[6]

So does this mean you can use any recorded conversation in court whenever you want?

The short answer: No. Anything presented in court still needs to comply with the Rules of Evidence, and in many cases recorded conversations will not make the cut. A big reason is the hearsay rule, which says that out of court statements cannot be used to prove the truth of the matter asserted.^[7] In other words, you can’t use a recording of your neighbor saying “I use my neighbor’s Wi-Fi” as evidence to prove that he was, in fact, using your Wi-Fi.

But there are many exceptions to the hearsay rule which might allow a recorded conversation into court. Salient among these exceptions is the rule that admissions of a party-opponent are not hearsay.^[8]Consequently, if a man records his ex-wife’s conversation with her current husband, the hearsay rule will not prevent the man from using the recording of his ex-wife against her in a child custody case; the ex-wife is a “party-opponent” and her out-of-court statements are not considered hearsay.

Continuing this same example, note that the man’s actions would violate the eavesdropping statute (assuming he didn’t have permission to make the recording) because he was not a participant in the hypothetical conversation. But this violation would not keep the recording out of court. Nevertheless, if a prosecutor wanted to press charges, the man could be subject to criminal liability. And if the ex-wife was so inclined, she could file a civil lawsuit against the man and ask for an injunction and monetary damages.

Other Law: Is the eavesdropping statute the only law you need to worry about before recording all of your conversations?

The short answer: No, don’t hit record just yet. Even if you comply with the eavesdropping statute, there are still other potential pitfalls to be aware of. For instance, wiretapping laws govern the recording and interception of telephone calls and electronic communications, and carry criminal penalties. For inter-state phone calls, the laws of other states will come into play as well. And depending on the means you use to obtain a recording and what you do with the recording once you have it, you risk incurring civil liability for a variety of privacy torts, such as intrusion upon seclusion or public disclosure of private facts.

The safest route is to always get permission from everyone involved before recording a conversation or sharing a recorded conversation with anyone. If that’s not an option, consult with a lawyer who has had an opportunity to consider all of the facts involved in your case.

________________________________

^[1] MCL 750.539 et seq.
^[2] MCL 750.539a; MCL 570.539c.
^[3]MCL 750.539e.
^[4] See Sullivan v. Gray, 117 Mich. App. 476, 324 N.W.2d 58, 59 – 61 (1982).
^[5] MCL 750.539h.
^[6] See, e.g., Swan v. Bob Maxey Lincoln Mercury, No. 216564, 2001 WL 682371, at *2 n3 (Mich. Ct. App. Apr. 24, 2001)
^[7] MRE 802.
^[8] MRE 801(d)(2).

For more legal analysis go to The National Law Review

Litigation After Devastation: The Legal Storm Surge

Bridges crumbling in Texas. Houses turned to toothpicks in the USVIs. Newly-formed rivers ravaging the streets in South Florida. The devastating destruction from the recent hurricanes that have pummeled the U.S. has uprooted many peoples’ homes and lives, but we have only begun to feel the impact of the surge.

Massive relief efforts have begun, national fundraising, news coverage, responsive legislation, and building codes to name a few. A litigation surge is swelling as well. We have seen several types of cases and class actions churn from a hurricane’s aftermath. Here are some of the types of cases, coverage issues, and expert needs you may see after the storm.

Property Damage and Meteorological Causation

Insurance companies insuring the Southern United States are bracing for the waves of claims that will soon be flooding in. Just as it was following Hurricanes Katrina, Ivan, and Sandy, the hotly-debated issue of whether the damage was caused by wind or water will be the likely focus. While most homeowner insurance policies will cover water damage that was caused by a roof or window that was compromised by wind and allowed water intrusion, most do not cover water that rises from the ground level and enters the home. Experts will be relied upon to determine how water got into a structure, even when it is entirely obliterated.

Insurance companies and attorneys will be looking for experts in meteorology, often with advanced degrees and testifying experience, who can opine on the types of weather conditions that might have existed at a given time in a given place (i.e., Key West when Hurricane Irma struck). The experts could come from academia or environmental institutes and societies. They will be asked to review various data points and speak on weather conditions at a particular time and place to support causation for insurance coverage. Structural engineers will also be needed, preferably with experience in standard insurance practices, procedures, and protocols in evaluating damage caused by hurricanes. They will need to have an understanding of insurance claims handling and will be asked to review various reports and data, some from other engineers, discussing damage caused to structures by the hurricane and opine as to whether or not the reports and data are accurate.

Structural Failures and Faulty Design/Construction

While many large, concrete commercial buildings and bridges are designed to withstand 150+ mph winds and flooding, they can still be left severely damaged after a storm blows through. Structural failure of buildings, roofs, bridges, and roadways that were expected to withstand hurricane winds will lead to litigation over damage caused by the failure. Structural engineers with expertise in the types of structures at issue, likely licensed engineers, will be needed to examine damage patterns through photos, video, or via a post-storm on-scene inspection. They will also need to use meteorological wind information to determine the cause of the failure and the quality of the design or construction.

Class Actions for Coverage Determinations

Often, the core issues in insurance-related storm damage cases are similar across a wide span of policyholders. These cases will vary depending on the coverage matter at issue, but the most sought-after experts will be familiar with insurance claims standards, protocols, and policy interpretation. Construction experts may also be needed to opine on the necessity and extent of certain repairs required after a storm. Also, standard practices and interactions between contractors and insurance companies during the re-build process will come into question. Class actions may be filed as well, simply as placeholders to toll certain claims-filing deadlines or allow broader bad faith discovery against insurance companies who refuse to pay mass claims.

Litigation Over Price-Gouging

One of the worst scenarios to follow a storm is wide-scale price-gouging and scamming by companies trying to capitalize on the desperation and vulnerability of storm victims. Before the storm, many people preparing for power outages or evacuation will see unfair spikes in essentials such as water and gas. After the storm, shady contractors and tree-removers often flood in, lie about their licensing and credentials, and charge exorbitant fees while performing shoddy, haphazard work, or no work at all. Many states, including Florida, have made it a crime for any service provider to offer or sell essential commodities for an amount that “grossly exceeds the average price” during the thirty days following a declaration of emergency. In the days before Hurricane Irma’s approach, many reported price-gouging for essentials such as water, ice, batteries, and gas when thousands of Floridians were stocking up or evacuating. Class actions alleging price-gouging will likely occur following the storm. Experts in standard industry pricing, manufacture costs, and storm clean-up and repair may be called in to opine on the “average price” of certain essential commodities and post-storm services.

In the wake of Hurricanes Harvey and Irma, we are gearing up for the incumbent waves of litigation and expert requests we anticipate will follow. What types of cases, class actions, and expert needs are you expecting?

For more legal analysis go to The National Law Review

For Whom the Class Tolls: “No Piggybacking Rule” Does In Would-Be Class in Ongoing Wal-Mart Saga

In 2011, the United States Supreme Court issued its landmark decision in Wal-Mart Stores, Inc., v. Betty Dukes, et al., decertifying a putative class of approximately 1.6 million current and former female Wal-Mart employees who claimed gender discrimination in wages and promotions in violation of Title VII. 564 U.S. 338 (2011). The Court reversed the Ninth Circuit’s affirmation of class certification and determined the plaintiffs failed to meet the class “commonality” standard set out in Federal Rule of Civil Procedure 23. Id. at 349-60. The Dukes decision set in motion a number of spinoff regional cases, one of which – barring another grant of certiorari to the high court – met its end somewhat anticlimactically, when the Eleventh Circuit issued its August 3, 2017 order in Love, et. al. v. Wal-Mart Stores, Inc. No. 15-15260.

The Love plaintiffs included a sub-group of the Dukes plaintiffs who worked in the southeastern United States. These holdover Dukes plaintiffs were able to refile their claims because of the requirement that federal court discrimination plaintiffs first file with the Equal Employment Opportunity Commission. This rule effectively tolled the statute of limitations during the pendency of Dukes. But critically, under the Eleventh Circuit’s “no piggybacking rule”, tolling is limited to individual claims only, not class claims, which has also been adopted by the Fifth and Sixth Circuits. The Love court previously left little room for argument when it noted in a 2013 order that “[t]he Eleventh Circuit categorically refuses to toll the limitations period for subsequent class actions by members of the original class once class certification is denied in the original suit.” Thus, on October 16, 2015 the individual named plaintiffs and Wal-Mart settled and jointly filed a “stipulation of voluntary dismissal.”

On November 6, 2015, the Love appellants, made up of unnamed members of the would-be class, filed a motion to intervene solely to appeal the dismissal of class claims. This motion was denied 13 days later as moot, which, to make matters worse for the appellants, took them outside of their 30-day deadline to appeal the October 16 stipulated dismissal. The Eleventh Circuit thus found the appeal jurisdictionally barred, providing a rather sudden end to the winding multi-year litigation.

In light of this tangled and technical history, employers and their counsel should be sure to understand the differences in treatment of class actions and individuals under the relevant rules, regulations, and statutes. Though it can be tempting to move immediately to the standard substantive arguments against numerosity, commonality, typicality, and adequacy of the proposed class, the Wal-Mart cases show that knowing your way around the procedural thicket is another useful skill in avoiding or minimizing the cost of class litigation.

This post was written by Kelly J. Muensterman of Polsinelli PC.

_{[1] https://www.supremecourt.gov/opinions/10pdf/10-277.pdf}

_{[2] http://hr.cch.com/eld/LoveWalmart080317.pdf}

_{[3] Salazar–Calderon v. Presido Valley Farmers Ass’n, 765 F.2d 1334 (5th Cir.1985) and Andrews v. Orr, 851 F.2d 146 (6th Cir.1988)}

_{[4] 2013 WL 5434565, at *2.}

For more legal analysis check out the National Law Review’s homepage.

Trump Continues Focus on State Prosecutorial Experience in United States Attorney Nominations

On June 29, 2017, President Donald Trump made his second group of nominations of prospective United States Attorneys. With the eight lawyers he nominated earlier in June, this group brings the current number of Trump’s United States Attorney nominations to seventeen – around 20% of the total number of positions. The nine lawyers he nominated last week are:

Kurt Alme, the President and General Counsel of the Yellowstone Boys and Girls Ranch Foundation, to be the United States Attorney for the District of Montana.
Donald Q. Cochran, a Professor of Law at Belmont University College of Law, to be the United States Attorney for the Middle District of Tennessee.
Russell M. Coleman, a member of the Frost Brown Todd law firm, to be the United States Attorney for the Western District of Kentucky.
Bart M. Davis, the Majority Leader in the Idaho State Senate since 2002, to be the United States Attorney for the District of Idaho.
Halsey B. Frank, an Assistant United States Attorney for the District of Maine, to be the United States Attorney for the District of Maine.
J. Cody Hiland, the District Attorney in Arkansas’s 20th Judicial District, to be the United States Attorney for the Eastern District of Arkansas.
D. Michael Hurst, Jr., the director of the Mississippi Justice Institute and General Counsel for the Mississippi Center for Public Policy, to be the United States Attorney for the Southern District of Mississippi.
William C. Lamar, an Assistant United States Attorney in the Northern District of Mississippi, to be the United States Attorney for the Northern District of Mississippi.
R. Trent Shores, an Assistant United States Attorney in the Northern District of Oklahoma, to be the United States Attorney for the Northern District of Oklahoma.

So far, thirteen of Trump’s seventeen nominees have come from states with two Republican Senators where the “blue slips” approving Presidential nominations are likely easier to come by. Thirteen of Trump’s nominees are also from small or medium districts as DOJ categorizes them. Small and medium districts are those with fewer personnel resources (especially given the DOJ hiring freeze currently in effect), so adding Presidentially-appointed United States Attorneys to these districts will free up the acting United States Attorneys (career prosecutors who were already in the office) to return to prosecuting cases and other matters – no small addition in offices that may only contain twenty or thirty lawyers.

This batch of Trump nominees is very similar to his initial group, as well as similar to the Obama nominees as a whole:

Trump’s first batch of nominees had around 26 years of legal experience on average. Reverting to the mean, Trump’s seventeen nominees as a whole average around 23 years of legal experience – the same as the average Obama nominee.
Sixteen of the seventeen Trump nominees have prior state or federal prosecutorial experience (everyone but Idaho’s Bart Davis), compared with the more than 80% of Obama nominees who had prosecutorial experience prior to nomination. Eleven of Trump’s nominees have federal prosecutorial experience, consistent with the approximately 60% of Obama nominees who served as federal prosecutors prior to nomination.
Two of Trump’s seventeen nominees are former Congressional staff members: Donald Coleman for current Senate Majority Leader Mitch McConnell of Kentucky, and D. Michael Hurst, Jr., for former Representative Chip Pickering of Mississippi and for the House Judiciary Committee. This is also consistent with the Obama nominees, of which around 10% had service as staffers on the Hill. These types of relationships are thought to be helpful when issues involving DOJ are being decided by Congress.

Despite the similarities, Trump continues to emphasize state prosecutorial experience in a way that Obama did not. While less than a third of the Obama nominees had state prosecutorial experience, over half of Trump’s nominees to this point do. Furthermore, three of Trump’s nominees are elected District Attorneys; while three of Obama’s more than 100 total United States Attorney nominees had prior service as an elected District Attorney, none were serving in that capacity at the time of nomination. As noted before, studies have shown that violent crime is more often addressed by state courts than by federal courts. Trump’s continued focus on lawyers with state prosecution experience is still in keeping with his recent executive order emphasizing DOJ efforts to fight violent crime.

A couple of stray observations:

In 2015, Donald Cochran wrote a research paper for the American Journal of Trial Advocacy about how Malcolm Gladwell’s teachings in his book The Tipping Point can be helpful to lawyers during jury trials, which probably upped his “cool factor” among the law students he taught.

Shortly after Trump’s inauguration, Halsey Frank wrote an editorial in the southern Maine newspaper The Forecaster arguing in part that “President Trump is appointing some able people” – a nifty coincidence, that (or maybe an indicator he thought he might get the nomination?).

And a final note: This batch of nominees puts the pace of Trump’s United States Attorney nominations slightly ahead of Obama’s – Trump began July 2017 with seventeen nominations, while at the end of June 2009 Obama only had nine. Given that Obama finished July 2009 with nineteen total United States Attorney nominations, it is not unlikely that Trump’s nominations will continue to move along somewhat more quickly than Obama’s, at least in the short to medium term.

This post was written by Ripley Rand of Womble Carlyle Sandridge & Rice, PLLC.

Defendants’ Timing Defense to DTSA Claims Faces Mixed Results

With the law’s first anniversary in the rear view mirror, defendants have established a viable defense to claims arising under the Defend Trade Secrets Act (“DTSA”) – a plaintiff may be precluded from bringing a claim under DTSA if it only alleges facts that show acts of misappropriation occurring prior to May 11, 2016 (the date of DTSA’s enactment). In the last few months, four different courts have tackled this “timing defense,” and defendants raising it in motions to dismiss DTSA claims have encountered mixed results.

In Brand Energy & Infrastructure Servs. v. Irex Contr. Grp., No. 16-cv-2499, 2017 U.S. Dist. LEXIS 43497 (E.D. Pa. Mar. 23, 2017), a Pennsylvania federal court rejected the defendants’ attempt to invoke the timing defense because the plaintiff’s amended complaint alleged various times after the enactment of the DTSA that the defendants “used” the plaintiff’s alleged trade secrets. The court also noted the plaintiff’s inclusion of allegations in the amended complaint showing that “to this day, the defendants continue to ‘obtain access to [its] confidential and proprietary business information ….” Based on this pleading, the court held that the plaintiff could pursue its DTSA claim. Similarly, in AllCells, LLC v. Zhai, Case No. 16-cv-07323, 2017 U.S. Dist. LEXIS 44808 (N.D. Cal. Mar. 27, 2017), a California federal court denied the defendants’ motion to dismiss a DTSA claim because “even if [defendants] copied and thus acquired the alleged trade secrets before May 11, 2016, [the plaintiff] has sufficiently alleged that there was at least use of the trade secrets after that date. Hence, the Act applies.”

In Molon Motor & Coil Corp. v. Nidec Motor Corp., No. 16-cv-03545, 2017 U.S. Dist. LEXIS 71700 (N.D. Ill. May 11, 2017), a plaintiff’s DTSA claim survived dismissal, overcoming the defendant’s argument that “no acts occurred after the effective date of the Act.” The court held that the plaintiff’s allegations regarding the inevitable post-enactment disclosure of its trade secrets to the defendant by its former employee were sufficient to state a plausible DTSA claim: “[i]f it is plausible that some of the alleged trade secrets maintain their value today, then it is also plausible that [defendant] would be continuing to use them.” The court noted, however, that further discovery would be needed to determine whether post-enactment disclosure of the trade secrets was in fact inevitable.

By contrast, a California federal court granted a defendant’s motion to dismiss where a complaint lacked sufficient allegations regarding the timing of the alleged appropriation in Cave Consulting Grp., Inc. v. Truven Health Analytics Inc., No. 15-cv-02177, 2017 U.S. Dist. LEXIS 62109 (N.D. Cal. Apr. 24, 2017). In Cave, the plaintiff alleged that the defendant acquired trade secrets and used them in a 2014 client meeting, but that conduct predated the enactment of the DTSA. The court held that plaintiff had failed to make any “specific allegations that defendant used the alleged trade secrets after the DTSA’s May 11, 2016 enactment.” Because the plaintiff failed to allege that any “postenactment use occurred,” the plaintiff had not stated a plausible DTSA claim.

These decisions illustrate that the likelihood of success of the timing defense largely is a matter of drafting, and provide an important takeaway for both sides of a trade secrets dispute. A plaintiff should be mindful in drafting its pleading to include factual allegations showing that the defendant’s misappropriation occurred (or inevitably will occur) after DTSA’s enactment. The defendant, on the other hand, should carefully scrutinize the complaint to determine whether a timing defense applies.

This post was written by Jonathan L. Shapiro by Epstein Becker & Green, P.C..

Category: Litigation

Construction Liens on Leased Commercial Premises

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